By a 6-3 vote, the United States Supreme Court yesterday found that state law claims for failure to include an adequate warning on a pharmaceutical label are not preempted by the federal Food and Drug Administration’s (“FDA”) prior approval of the product’s label. Wyeth v. Levine, No. 06-1249 (March 4, 2009). The decision was unexpected by many and contrary to the FDA’s own amicus position. It deals a significant blow to the pharmaceutical industry’s ability to obtain early dismissal of state law failure to warn claims, and will likely lead to increased insurance premiums for pharmaceutical companies seeking product liability coverage.

In particular, the court rejected the petitioner’s arguments that (1) it would have been impossible for Wyeth to change the product label to comply with state law because doing so would have violated federal laws requiring labeling changes to be approved by the FDA; and (2) requiring Wyeth to comply with a state-law duty to provide a stronger warning than that approved by the FDA would interfere with Congress’ purpose of entrusting an expert federal agency with drug labeling decisions.

As to the impossibility argument, the Court rejected Wyeth’s “cramped reading” of the FDA “changes being effected” (“CBE”) regulation, stating that the CBE regulations permit a manufacturer to change a product’s label to “add or strengthen a warning to improve drug safety.” The Court further noted that the ultimate responsibility for proper labeling rests with the manufacturer, not the FDA, and opined that Wyeth’s argument sought to improperly shift that burden on to the FDA. The Court did indicate that, had Wyeth sought a CBE label change and such change had been rejected by the FDA, that such rejection might have preempted a subsequent state law failure to warn claim.

Concerning the “intent of Congress” argument, the Court concluded that the argument was premised on “an untenable interpretation of congressional intent and an overbroad view of an agency’s power to preempt state law.” The Court found no support for Wyeth’s position that Congress’ intent in passing the Food, Drug and Cosmetic Act (“FDCA”) was to preempt state law failure to warn claims, finding instead that the history of the FDCA showed that Congress had no such intent. As to Wyeth’s reliance upon the FDA’s own preamble to a 2006 FDA regulation, the Court found that the preamble was not entitled to the Court’s deference because it was “inherently suspect in light of the FDA’s failure to offer interested parties notice or opportunity for comment on the preemption question; it is at odds with the available evidence of Congress’ purposes; and it reverses the FDA’s own longstanding position that state law is a complimentary form of drug regulation without providing a reasoned explanation.”

The decision is particularly significant for the pharmaceutical industry, and its insurers, because it vitiates one of the industry’s primary tools for early termination of product liability suits based upon alleged failures to include adequate warnings on product labels. Such claims are frequent and, in the absence of the preemption argument at the motion to dismiss stage, costly to defend. Therefore, the Supreme Court’s decision is likely to increase pharmaceutical companies’ defense costs in defending such suits and will likely bring a parallel increase in premiums for insurance policies providing coverage for product liability claims.

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